Transcript:

Steven Jack Butala:
Jack and Jill here.

Jill K DeWit:
Hi.

Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.

Jill K DeWit:
And I’m Jill DeWit, broadcasting from the Valley of the Sun.

Steven Jack Butala:
Today, Jill and I talk about, should we be buying infill lots in this down market?

Jill K DeWit:
That was an interesting conversation that we had the other day. That was on the Thursday member call. I had to think about that, where it was. There’s been a lot of talking in my world last couple weeks. Lot of things. It was so fun. If you’re listening now, and you were on that webinar that I did last week on Thursday night, yep, did not know it was going to go that long, but I really wanted to answer everybody’s questions. I just looked up and I’m like, “Whoa, what happened at the time?” But that was really fun. Anyway, I’m still a little worn out from it.

Steven Jack Butala:
I think it’s natural. Well, I’m used to it. We’re both used to it now because it’s natural at the end of the year, and the beginning of the year, to make life decisions about where you want your life to go. And buying and selling land is, if it’s on your radar, it’s an expiration time.

Jill K DeWit:
Got it. Well, I was saying, yeah, there’s a lot of talking, so that’s why I got … This came up on the member call. No, and one of our advanced members shared some really good in insight information about his experience working with builders.

Steven Jack Butala:
Yeah.

Jill K DeWit:
And big builders. I can’t run the name of them, but it doesn’t matter. But it’s cool.

Steven Jack Butala:
So they’re in the market and buying. That was my takeaway.

Jill K DeWit:
I have no idea.

Steven Jack Butala:
Before we get into it, let’s take a question posted by one of our members on the Land Investors online community. It’s free. But before we get into all of that, I hope by now, Jill and I have a full-blown commercial printing company called offers2owners.com. We set this up several years ago because we were frustrated with the level of service and understanding that we were getting from normal, right off the street, commercial printing companies who print catalogs and stuff. What we set up was, and is, a printing company that just sends mail, Offers 2 Owners.

Jill K DeWit:
Can I just add that they have a special going on and it’s four more days.

Steven Jack Butala:
Oh yeah, it’s huge. Huge special.

Jill K DeWit:
So what he’s talking about, it’s 11% off mail, 16% off concierge data, which is awesome. So check it out on offers, and the number 2, owners.com.

Steven Jack Butala:
A lot of people prepay. A lot of our members prepay for their mailers for next year for tax reasons. So if you feel like you’re in that category, give those guys a call, they’ll explain it.

Jill K DeWit:
Oh yeah.
Kay wrote, “Hi. I’m new to land acquisitions. Please correct me if I’m wrong or misunderstood. If I work backward, home value in an area is $100,000. Land retail price will be around $25,000. And we try to send offers about 50% of the retail price. So $25,000 time divided by 50% is about $12,500. So should we send an offer at $12,500 per residential lot? That right? Please advise. Thank you in advance.”

Steven Jack Butala:
So again, Kay, your math is completely correct.

Jill K DeWit:
Yep.

Steven Jack Butala:
It’s what I call the rule of quarters. You have a $100,000 house. A builder is usually willing to pay 20% of the value of what a new house would command in that market. 20%, let’s say 20-to-25%. So $100,000, they’re willing to pay 25,000, so you need to be half of that at 12, let’s say. And then, so you buy for 12 and sell it to the builder for 20 or $25,000. Thank you, yes. The math is correct on that. You can’t build a house for 75 grand.

Jill K DeWit:
That’s what I was going to wonder if you were going to dress that. I was waiting. I’m like, “What is this going to look like?”

Steven Jack Butala:
You can buy a tent for 20-

Jill K DeWit:
Could you imagine? So it works … When the number’s a little bit higher, it works. This low, I don’t think it’s going to work. Go ahead.

Steven Jack Butala:
So the conventional wisdom among the group is, and I completely concur, is that you really don’t want to play in an infill lot market in any good time, it’s a good time or bad time, where the top retail value is lower than $300,000. And that will probably go up because of the way inflation is, and that supply chain is still, there’s still issues with that somewhat so.

Jill K DeWit:
And finding people, workers and stuff.

Steven Jack Butala:
And take a look at what HUD will-

Jill K DeWit:
Staff.

Steven Jack Butala:
… insure, or what the feds will insure, from a new mortgage standpoint. And that’s where you want to be. I think it’s closer to 400,000 now.

Jill K DeWit:
That’s what I think. I wouldn’t do it for less than 500 even.

Steven Jack Butala:
Yeah.

Jill K DeWit:
Just so you have some wiggle room.

Steven Jack Butala:
3, 4, 5.
But your math is correct. Just do the complete, and we’ll talk here a minute in a minute about, should we be doing it at all?

Jill K DeWit:
Well Kay’s saying, “Well thanks a lot, Jack.” Well, no, no, no. This is good. I don’t have 12,500, now you’re telling me I need to buy these for 50 and sell it for 100. Yeah And you know what, Kay? I can hook you up.

Steven Jack Butala:
Jill’s got the money.

Jill K DeWit:
I got the dough. So don’t worry about that at all. Your job, Kay, is go find those deals. I’ll be your bank until you don’t need me, which will probably be at about three deals.

Steven Jack Butala:
Yeah. And all kidding aside, we fund a lot of people’s deals. But geez, it’s not just us, it’s people in our group.

Jill K DeWit:
Oh yeah.

Steven Jack Butala:
There’s people in our group that fund deals.

Jill K DeWit:
They’re deal funding machines. That’s why they’re there.

Steven Jack Butala:
We have a discord channel for Land Academy, and a subtopic channel called “would you do this deal” or “would you fund this deal,” and any time every … I just looked at it because I put together these topics and-

Jill K DeWit:
They’re just snatched up, aren’t they?

Steven Jack Butala:
Yep. It’s like, “Hey, I’ve got this deal. I really like to do it. Here’s why. I just wrote a book about it.” And then three people say, “Hey, I just PMed you,” and then there’s silence.

Jill K DeWit:
Yeah.

Steven Jack Butala:
Just everybody was going off getting rich, and no one needs to talk about it anymore. No.

Jill K DeWit:
Good.

Steven Jack Butala:
Today’s topic, should we be buying infill lots at all in this down market? This is why you’re listening.

Jill K DeWit:
It’s funny, that it came up in my talk last week. And everybody’s like, “Okay, so what’s this monthly membership cost? Boy, that’s worth it right there alone.”

Steven Jack Butala:
Yeah.

Jill K DeWit:
Just to get the access to these people. I know people that pay big bucks to have access to people with deals. Like a lot of money.

Steven Jack Butala:
Well, the question that we should get, which we don’t really get too often is, how can you guys afford to do this? As-

Jill K DeWit:
For only.

Steven Jack Butala:
Land Academy itself, as inexpensively as you do it.

Jill K DeWit:
True.

Steven Jack Butala:
And survive, keep the lights on. And the answer is, because we do other people’s deals. Because we fund real estate transactions and we form-

Jill K DeWit:
And I’m doing my own.

Steven Jack Butala:
… form partnerships ourselves with some of the shining Land Academy members. To this day, we have lots of partners that we do deals with.

Jill K DeWit:
Yep.

Steven Jack Butala:
That’s why it’s worth it.

Jill K DeWit:
Yeah.
So today’s about-

Steven Jack Butala:
Infill lots.

Jill K DeWit:
… should we buy infill lots? I love this. This discussion that we fell into last week on our member call on Thursday really surprised me, so I’m glad that you included this today.

Steven Jack Butala:
So last Thursday, yeah, exactly. We have a Thursday call where all of our members, or many of our members submit their deals and we talk about it and laugh about it and everybody else gives their opinion and we’d say, “Hey, yeah, we should probably do this deal,” or, “You shouldn’t do this deal, and here’s why.” And we received, for the first time in probably three years, two houses to review. Jill and I have a company called House Academy also, it’s got its own members and all of that. And if you’re interested in taking a look at that, especially in this downtime now, you should just, it’s all out there the way Land Academy is on the internet for you to take a look at. And both of the houses that we received, we agreed that we should do the deals.

Jill K DeWit:
Buy them.

Steven Jack Butala:
That tells me that this is a time where you should sit down and think with yourself, and maybe your business partner, whether or not you want to buy infill lots real cheap and hold onto them until the market starts to uptick again.
When people are willing to sell houses at such a deep discount that you can actually make 100 grand.Both of these houses that we looked at, I believe these members are going to make a hundred thousand dollars net, and this is without ever going in the house. And not renovating it. I don’t know … If you’re new, you don’t know this. Jill and I are hardcore non-renovators. We don’t want to pick up a hammer, we don’t want to do anything to these assets. That’s what this is all about. We’re just good at buying them and reselling. And so yes, I think you should absolutely look at buying infill lots really, really inexpensively, knowing full well that you’re going to put it up for sale and it’s going to take a year to maybe two years to sell it, which is the original definition of land banking.

Jill K DeWit:
I love that.

Steven Jack Butala:
But use Kay’s math, and it’s really my math, but-

Jill K DeWit:
Well, I was going to add in-

Steven Jack Butala:
… the quarters.

Jill K DeWit:
… to what Carl shared with us. Do you want to add anything about that? Because that was impressive to me. Well, you helped me remember, because my brain is a little foggy right now. But he is a property manager for … He has a company that manages properties for very, very, very large developers. And I thought, and I sincerely asked the question, “Carl, are you worried? Is your company shut down?” He’s like, “Ho ho, quite the opposite.”

Steven Jack Butala:
Yeah. So he’s a property manager/handyman, like a heavy lifting handyman contractor, licensed contractor. And his customers are Wall Street-type companies like BlackRock that went in and bought whole subdivisions and they’re leasing them all out as if it were apart an apartment building. That’s how they look at these. Huge companies are looking at, instead of an apartment building where everybody lives in the building, they’re looking at an entire subdivision. New one, newly constructed subdivision, and they’re renting it out separately, obviously, to a bunch of tenants. And they’re treating it that way as an investment vehicle. And Jill asked him, “Is it slowing down?”

Jill K DeWit:
Right.

Steven Jack Butala:
Are you… And he’s-

Jill K DeWit:
“Are they not building anymore, so you’re not expanding?” kind of thing. He’s like, “Oh, are you kidding?”

Steven Jack Butala:
Building has dramatically slowed down, and in some cases just halted, but everybody’s still buying-

Jill K DeWit:
Buying.

Steven Jack Butala:
… and selling and renting and all of that. That’s not going to stop.

Jill K DeWit:
Yeah.

Steven Jack Butala:
And wealthy people wait for these downturns.

Jill K DeWit:
Yeah.

Steven Jack Butala:
And not just people sitting around sipping cocktails, it’s huge, huge private equity companies. And private equity is largely built, made up of, wealthy individuals and wealthy corporations where they dump a bunch of money so they don’t have to manage it themselves.

Jill K DeWit:
Right.

Steven Jack Butala:
They don’t have to look for investment places and they expect a return for that. And that’s what really private equity is. And so they live and die by acquisitions and finding, especially now, finding great deals because their cost capital’s a little bit higher. So now more than ever is a great time to buy infill lots, but you have to buy them way cheaper than you probably are used to buying them if you’ve been buying and selling land pretty hardcore in the last 24 months.

Jill K DeWit:
It’s pretty cool.

Steven Jack Butala:
We are.

Jill K DeWit:
Yep. I love it.
Happy you could join us today. Five days a week you could find us here on the Land Academy Show.

Steven Jack Butala:
Tomorrow the episode on the Land Academy show is called Assessing Your Professional Life At the End of 2022. You are not alone in your real estate ambition. I always like, I love the end of the year in the beginning of the year. Do you like it versus June or July? Does it matter?

Jill K DeWit:
Yeah, I have to think about that. I think I do. I do. I’m motivated. I’m usually pretty motivated in general, but I think the end of the year and the beginning of the year gets me really excited about stuff and possibilities and looking forward to what we’re going to do. And I’m looking forward to 2023 and just within Land Academy what we’re going to do. It’s going to be awesome.

Steven Jack Butala:
Me too.

Jill K DeWit:
Yeah.

Steven Jack Butala:
Hey, like Jill said yesterday, our printing company Offers 2 Owners is taking pre-orders at a pretty deep discount for all of next year, for 2023, up to January 31st. So please take a look if you want to plan for your mailing-

Jill K DeWit:
Up to December 31st?

Steven Jack Butala:
If you want to plan for your mailing schedule in 2023, should give those guys a call or send them a note and ask them how it works.

Jill K DeWit:
Got it. Yeah. Well, the special ends on Friday, just so you know, ends on Christmas … I’m sorry, that’s not Friday. But anyway, the special ends on Christmas Day, whatever day that is.

Steven Jack Butala:
I think it’s Sunday.

Jill K DeWit:
I think it’s Saturday, Sunday? I don’t know. Yeah, I think it is Sunday. You’re right. This sends on Sunday, but you can still prepay for next year through the end of this year. That’s what you’ll want to.

Steven Jack Butala:
At a discount.

Jill K DeWit:
Yep.

Steven Jack Butala & Jill K DeWit:
We are Jack and Jill.

Steven Jack Butala:
Information-

Jill K DeWit:
And Inspiration-

Steven Jack Butala:
… to buy undervalued property.